Kazakhstan Laws May Threaten Western Deals

26 January 2010 (Last Updated January 26th, 2010 18:30)

Kazakhstan plans to enforce new tax regulations that could affect oil projects operated by Western companies in the country. The new taxation will help Kazakhstan earn additional revenues following the economic crisis and strengthen its control over the energy sector, reports Reuters.

Kazakhstan plans to enforce new tax regulations that could affect oil projects operated by Western companies in the country.

The new taxation will help Kazakhstan earn additional revenues following the economic crisis and strengthen its control over the energy sector, reports Reuters.

The move, which would compel Western oil companies to pay domestic taxes, will result in the revision of oil contracts signed by overseas energy companies such as Shell, BP and Chevron.

Shell is part of a consortium that is involved in the development of the Kashagan field, while BP holds an interest in the Karachaganak project and Chevron is leading a consortium for the development of the Tengiz field.

Under the production sharing contracts that these companies signed, the amount of tax they pay and the profit they get are fixed, and any revisions to the country's tax rules are not applicable to them.

Kazakhstan President Nursultan Nazarbayev said overseas projects in the oil and gas sector should no longer be immune to revisions in tax rules.

"Of course, there is an order so we will (implement) it," Energy Minister Sauat Mynbayev told his parliament, reports Reuters.